Page 205 - TrumpsEconEra_Flat

Trump’s Economic Era

many other nations because exports account for only
13% of U.S. economic output. Even though a stronger
dollar weighs on exports, the broader economic impact
is limited. Moreover, a stronger dollar means that
Americans will pay less for imported oil, which can be
a big boost to the economy.

A high valued dollar can hurt U.S. companies that
have a presence in foreign countries. The strong dollar
can hurt multinational corporations in several ways.
Companies’ sales may be high in the international
market, but when they convert foreign currency back
into American dollars, the real return on investment
takes a big hit. The changing currency values can also
cause a mismatch between costs and sales. This
mismatch makes it more difficult for export-oriented
companies to compete. To make matters worse, the
negative effects of a currency revaluation can damage
the value of a corporation’s stock price.

When the world’s central banks abandon their
responsibility for global exchange-rate movements, the
whole world shakes. When each national bank pursues
its monetary policy for domestic purposes, in this
interconnected world of fiat currencies, it becomes a
race to the bottom. No global economic system can
prosper if countries only look out for themselves
without regard to how their actions affect other
countries. Currency wars hurt everyone. Should
countries abandon fiscal and monetary restraint, and
impose trade restrictions on other nations, the world
will slip into a depression.

Since taking office, President Trump has not only
accused both China and Japan of consistently devaluing

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